As the country transitions from an investment-based economy to one driven by consumer consumption, older growth drivers known as the secondary industry — think the property market and manufacturing — are becoming less profitable.

What we are witnessing is the slow death of Old China, and it isn't pretty.

"We expect China's GDP growth to continue to slow in 2016 driven by further deterioration of secondary industry, which comprises 43% of economic output and whose growth plummeted to a record low of 1.2% yoy in 3Q15," Chu wrote in the note.

China's secondary industry is drowning in debt. Old China's companies are not growing fast enough to keep up with interest payments on their debt.

Autonomous Research

What China bulls will tell you is that other parts of the economy are coming in to save the day. Chu writes that that is simply not the case.

"Consumption and services remain bright spots. However, we doubt these areas can accelerate enough to offset a further slowdown - and likely contraction - of secondary industry in 2016, particularly as it increasingly weighs on household income growth, the principal driver of consumption and services expansion," she wrote.

Agriculture, consumption and the service sectors of the economy are estimated to have grown 10.7% in 2015. Not bad during a slowing economy.

However, for China to hit its 2016 GDP target of 6.5% while Old China is dying, those sectors will have to grow significantly faster. If Old China contracts 5%, the rest of the economy will have to grow 14.3% by Chu's estimation. If it contracts by 10%, the rest of the economy will have to grow by 17.7%.

Plus, as Old China crashes, people are going to be out of work. That's not going to help consumption in other sectors of the economy.